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What happens if you don't meet the June 30 FBAR deadline?

The IRS takes its filing deadlines seriously, but the agency does not make it easy to remember the finer points of each due date. April 15, for example, is the deadline for filing income tax returns. By deadline, the IRS means that the return must be mailed by 11:59 p.m. on that date. Of course, you can always request an extension, but April 15 is the date everyone associates with filing income tax returns.

In contrast, the deadline for foreign bank and financial account reporting is June 30. For FBAR, though, it is not the last mailing date. Rather, the IRS must receive FBAR filings by June 30. The date is firm, as well. There is no such thing as an FBAR extension.

According to the U.S. Treasury Department's Financial Crimes Enforcement Network, however, it is possible, under certain circumstances, to file a report late without suffering a penalty. If, for example, you discover after June 30 that you should have filed, the IRS recommends that you submit your report immediately. If the IRS determines it was a reasonable violation, there may not be a penalty.

How the IRS handles violations has been a source of confusion for taxpayers and their attorneys and advisers. The most egregious violations can land a taxpayer in jail, of course, but others earn civil penalties. The process for calculating those penalties, however, has not been clear. Taxpayers, in fact, have complained that the fines are arbitrary and unjustified.

The IRS released a memorandum last month that clarifies the process. Whether the agency justifies the penalties is still up for debate.

We'll look at the revised approach to FBAR penalties in our next post.

Source: Accounting Today, "IRS Issues New Guidance on FBAR Penalties," Michael Cohn, June 3, 2015

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